EQUITY BANCSHARES INC

Results of Operations

We generate our revenue from interest income and fees on loans, interest and dividends on investment securities, and non-interest income, such as service charges and fees, debit card income, trust and mortgage banking income. We incur interest expense on deposits and other borrowed funds and non-interest expense, such as salaries and employee benefits and occupancy expenses.

Changes in interest rates earned on interest-earning assets or incurred on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing and non-interest-bearing liabilities and stockholders’ equity, are usually the largest drivers of periodic change in net interest income. Fluctuations in interest rates are driven by many factors, including governmental monetary policies, inflation, deflation, macroeconomic developments, changes in unemployment, the money supply, political and international circumstances and domestic and foreign financial markets. Periodic changes in the volume and types of loans in our loan portfolio are affected by, among other factors, economic and competitive conditions in Arkansas, Iowa, Kansas, Missouri, Nebraska and Oklahoma, as well as developments affecting the consumer, commercial and real estate sectors within these markets.

Net Income

Three months ended September 30, 2026, compared with three months ended September 30, 2025: Net income (loss) allocable to common stockholders for the three months ended September 30, 2026, was $26.8 million, or $1.29 diluted earnings per share as compared to $(29.7) million, or $(1.55) diluted earnings per share for the three months ended September 30, 2025, an increase of $56.4 million. The increase was primarily driven by a $55.4 million increase in non-interest income, because the third quarter of 2025 included a $53.4 million net loss on securities transactions (see “Non-Interest Income”), and a $10.4 million increase in net interest income (interest and dividend income increased $17.9 million, partially offset by a $7.5 million increase in interest expense). Also contributing were a $4.6 million decrease in the provision for credit losses and a $968 thousand decrease in non-interest expense, partially offset by a $14.8 million increase in income tax expense.

Nine months ended September 30, 2026, compared with nine months ended September 30, 2025: Net income allocable to common stockholders for the nine months ended September 30, 2026, was $70.2 million, or $3.35 diluted earnings per share as compared to $642 thousand, or $0.04 diluted earnings per share for the nine months ended September 30, 2025, an increase of $69.5 million. The increase was primarily driven by a $54.0 million increase in non-interest income, because the nine months ended September 30, 2025 included a $53.3 million net loss on securities transactions, and a $57.8 million increase in net interest income (interest and dividend income increased $84.8 million, partially offset by a $27.0 million increase in interest expense), partially offset by a $21.8 million increase in non-interest expense and a $20.5 million increase in income tax expense.

Net Interest Income and Net Interest Margin Analysis

Net interest income is the difference between interest income on interest-earning assets, including loans and securities, and interest expense incurred on interest-bearing liabilities, including deposits and other borrowed funds. To evaluate net interest income, management measures and monitors (1) yields on loans and other interest-earning assets, (2) the costs of deposits and other funding sources, (3) the net interest spread, and (4) net interest margin. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is calculated as net interest income divided by average interest-earning assets. Because non-interest-bearing sources of funds, such as non-interest-bearing deposits and stockholders’ equity also fund interest-earning assets, net interest margin includes the benefit of these non-interest-bearing sources of funds. Net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as a “volume change,” and is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing deposits and other borrowed funds, referred to as a “yield/rate change.”

Three months ended September 30, 2026, compared with three months ended September 30, 2025: The following table shows the average balance of each principal category of assets, liabilities, and stockholders’ equity and the average yields on interest-earning assets and average rates on interest-bearing liabilities for the three months ended September 30, 2026, and 2025. The yields and rates are calculated by dividing annualized income or annualized expense by the average daily balances of the associated assets or liabilities.

(1)

Average loan balances include non-accrual loans.

(2)

Net interest margin is calculated by dividing annualized net interest income by average interest-earning assets for the period.

(3)

Tax exempt income is not included in the above table on a tax equivalent basis.

(4)

Actual un-rounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts.

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest yields/rates. The following table analyzes the change in volume variances and yield/rate variances for the three month periods ended September 30, 2026 from September 30, 2025.

Analysis of Changes in Net Interest Income

For the Three Months Ended September 30, 2026

(1)

The effect of changes in volume is determined by multiplying the change in volume by the previous year’s average rate. Similarly, the effect of rate changes is calculated by multiplying the change in average rate by the prior year’s volume. The changes attributable to both volume and rate, which cannot be segregated, have been allocated to the volume variance and the rate variance in proportion to the relationship of the absolute dollar amount of the change in each.

Interest income increased $17.9 million for the quarter ended September 30, 2026, as compared to the quarter ended September 30, 2025. The increase was due to a $22.1 million increase attributable to higher average interest-earning assets, primarily as a result of our acquisitions of Frontier and NBC, partially offset by a $4.2 million decrease attributable to lower yields. Average interest-earning assets increased $1.30 billion, or 23.3%, to $6.87 billion, while the yield on interest-earning assets decreased 19 basis points to 6.29%. The yield on loans decreased 47 basis points to 6.71%, partially offset by $3.6 million of purchase accounting accretion on acquired loans (compared with $2.5 million in the third quarter of 2025). The yield on securities increased 72 basis points to 4.93%, following the repositioning of our investment portfolio that included the sale of lower-yielding securities in 2025 and the reinvestment of proceeds in higher-yielding securities. The yield on federal funds sold and other interest-earning assets decreased 68 basis points to 3.62% on average balances that were $200.7 million lower.

Interest expense increased $7.5 million compared to the quarter ended September 30, 2025, with $8.9 million attributable to higher average balances, partially offset by a $1.4 million decrease attributable to lower rates. Average interest-bearing deposits increased $1.11 billion, or 28.9%, to $4.95 billion, primarily as a result of deposits acquired in the Frontier and NBC acquisitions. Average certificates of deposit increased $560.2 million, or 58.2%, and accounted for $4.3 million of the increase in interest expense.

Average Federal Home Loan Bank advances increased $94.8 million to $262.8 million, adding $815 thousand of interest expense. The cost of interest-bearing deposits decreased 5 basis points to 2.53%, while the cost of total deposits, including non-interest-bearing deposits, increased 7 basis points to 2.05%, as our funding mix shifted toward higher-cost time deposits, including brokered deposits, and average non-interest-bearing deposits decreased $10.4 million to $1.16 billion. Net interest margin decreased 25 basis points to 4.20% from 4.45% in the third quarter of 2025, and net interest spread decreased 13 basis points to 3.61% from 3.74%, as the 19 basis point decrease in the yield on interest-earning assets exceeded the 6 basis point decrease in the cost of interest-bearing liabilities. Compared with the second quarter of 2026, net interest margin decreased 16 basis points from 4.36% and net interest income decreased $1.0 million, while average interest-earning assets increased $78 million. The sequential decrease was primarily due to higher average borrowings and brokered deposits that funded additional lower-yielding securities (average securities increased $110 million), a 5 basis point decrease in loan coupon yield, and a 7 basis point increase in the cost of total deposits, partially offset by a $0.7 million increase in purchase accounting accretion.

Nine months ended September 30, 2026, compared with nine months ended September 30, 2025: The following table shows the average balance of each principal category of assets, liabilities, and stockholders’ equity and the average yields on interest-earning assets and average rates on interest-bearing liabilities for the nine months ended September 30, 2026, and 2025. The yields and rates are calculated by dividing annualized income or annualized expense by the average daily balances of the associated assets or liabilities.

(1)

Average loan balances include non-accrual loans.

(2)

Net interest margin is calculated by dividing annualized net interest income by average interest-earnings assets for the period.

(3)

Tax exempt income is not included in the above table on a tax equivalent basis.

(4)

Actual un-rounded values are used to calculate the reported yield or rate disclosed. Accordingly, recalculations using the amounts in thousands as disclosed in this report may not produce the same amounts.

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest yields/rates. The following table analyzes the change in volume variances and yield/rate variances for the nine month periods ended September 30, 2026 from September 30, 2025.

Analysis of Changes in Net Interest Income

For the Nine Months Ended September 30, 2026

Interest income increased $84.8 million for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025. The increase was due to a $89.6 million increase attributable to higher average interest-earning assets, which increased $1.81 billion, or 35.8%, to $6.85 billion, primarily as a result of our acquisitions of Frontier and NBC, partially offset by a $4.8 million decrease attributable to lower yields, principally on loans. The yield on loans decreased 35 basis points to 6.75% and the yield on securities increased 108 basis points to 5.05%, resulting in a yield on total interest-earning assets of 6.34% compared with 6.35%.

Interest expense increased $27.0 million, with $30.4 million attributable to higher average interest-bearing liabilities (up $1.49 billion, or 39.3%, to $5.29 billion), primarily as a result of our acquisitions of Frontier and NBC, partially offset by a $3.4 million decrease attributable to lower rates. Average certificates of deposit increased $687.9 million and accounted for $16.7 million of the increase. The cost of interest-bearing deposits was unchanged at 2.50%, and the cost of total deposits, including non-interest-bearing deposits, increased 7 basis points to 2.01%.

During the nine months ended September 30, 2026 when compared to the nine months ended September 30, 2025, net interest margin decreased 1 basis point to 4.30 % from 4.31% and net interest spread increased 7 basis points to 3.70% from 3.63%. The stability of the margin reflects higher securities yields offsetting lower loan yields and a higher cost of total deposits.

Provision for Credit Losses

We maintain an allowance for credit losses for estimated losses in our loan portfolio. The allowance for credit losses is increased by a provision for credit losses, which is a charge to earnings, and subsequent recoveries of amounts previously charged-off, but is decreased by charge-offs when the collectability of a loan balance is unlikely. Management estimates the allowance balance required using past loan loss experience within our portfolio. This historical loss calculation is then modified to reflect quantitative economic circumstances based on evidenced economic conditions and regression formulas, which incorporate lag factors in identifying a sufficiently predictive adjusted-R square, as well as qualitative factors not inherently reflected in our historical loss or quantitative economic inputs. Included in our qualitative assessment is the consideration of prospective economic conditions over the next 12 months, which is what we consider as our reasonable and supportable forecast period. As these factors change, the amount of the credit loss provision changes.

Three months ended September 30, 2026, compared with three months ended September 30, 2025: During the three months ended September 30, 2026, there was a provision for credit losses of $1.7 million compared to a provision for credit losses of $6.2 million for the three months ended September 30, 2025. We continue to estimate the allowance for credit losses with assumptions that anticipate slower prepayment rates and continued market disruption caused by the impact of U.S. trade and fiscal policy and the resulting impact on consumers and businesses. Net charge-offs for the three months ended September 30, 2026 and 2025, were $2.1 million and $1.1 million, respectively. Net charge-offs in the third quarter of 2026 were primarily in commercial and industrial loans ($1.8 million). The allowance for credit losses decreased $435 thousand during the quarter to $64.0 million because the provision was less than net charge-offs. For the three months ended September 30, 2026, gross charge-offs were $2.4 million, offset by gross recoveries of $258 thousand. In comparison, gross charge-offs were $1.4 million for the three months ended September 30, 2025, offset by gross recoveries of $330 thousand.

Nine months ended September 30, 2026, compared with nine months ended September 30, 2025: During the nine months ended September 30, 2026, there was a provision for credit losses of $8.9 million compared to a provision for credit losses of $9.0 million for the nine months ended September 30, 2025. We continue to estimate the allowance for credit losses with assumptions that anticipate slower prepayment rates and continued market disruption caused by the impact of U.S. trade and fiscal policy and the resulting impact on consumers and businesses. Net charge-offs for the nine months ended September 30, 2026 and 2025, were $5.1 million and $1.8 million, respectively. For the nine months ended September 30, 2026, gross charge-offs were $7.4 million, offset by gross recoveries of $2.3 million. In comparison, gross charge-offs were $3.7 million for the nine months ended September 30, 2025, offset by gross recoveries of $1.8 million. The allowance for credit losses increased $11.2 million from December 31, 2025, reflecting the $8.9 million provision and the allowance established on purchased-credit-deteriorated and purchased seasoned loans acquired in the Frontier acquisition, partially offset by net charge-offs of $5.1 million.

The primary sources of non-interest income are service charges and fees, debit card income, mortgage banking income, trust income and increases in the value of bank-owned life insurance. Non-interest income does not include loan origination or other loan fees, which are recognized as an adjustment to yield using the interest method.

Three months ended September 30, 2026, compared with three months ended September 30, 2025: The following table provides a comparison of the major components of non-interest income for the three months ended September 30, 2026, and 2025.

For the Three Months Ended September 30,

Total non-interest income increased $55.4 million during the three months ended September 30, 2026, as compared to the same period in 2025. The increase is due to a $53.4 million net loss on securities transactions in the third quarter of 2025, resulting from the sale of securities in connection with the repositioning of our investment portfolio, compared with a net gain of $10 thousand in the third quarter of 2026.

Nine months ended September 30, 2026, compared with nine months ended September 30, 2025: The following table provides a comparison of the major components of non-interest income for the nine months ended September 30, 2026, and 2025.

For the Nine Months Ended September 30,

Total non-interest income increased $54.0 million during the nine months ended September 30, 2026, as compared to the same period in 2025. The increase is due to losses on security transactions realized during the nine months ended September 30, 2025, that did not recur in the nine months ended September 30, 2026, causing a decrease in net loss on securities of $52.0 million (the nine months ended September 30, 2026 included a $1.3 million net loss on securities transactions, including impairment losses on a fund investment), along with increases in debit card income of $1.4 million and mortgage banking of $1.1 million, partially offset by a decrease in value of bank owned life insurance of $1.9 million.

Three months ended September 30, 2026, compared with three months ended September 30, 2025: For the three months ended September 30, 2026, non-interest expense totaled $48.1 million, a decrease of $968 thousand, comprised of a $5.2 million decrease in merger expenses, partially offset by a $4.2 million increase in all other non-interest expense, when compared to the three months ended September 30, 2025. Changes in the various components of non-interest expense for the three months ended September 30, 2026, and 2025, are discussed in more detail in the following table.

For the Three Months Ended September 30,

Salaries and employee benefits: There was an increase in salaries and employee benefits of $1.3 million for the period ended September 30, 2026, as compared to the same period in 2025. The increase in employee salaries and wages was due to additional payroll costs as well as an increase in employee insurance expense, which is primarily driven by the increase in staff from the NBC and Frontier acquisitions.

Net occupancy and equipment: There was an increase in net occupancy and equipment of $662 thousand for the period ended September 30, 2026, as compared to the same period in 2025. The increase was primarily related to Frontier lease amortization, rent and depreciation

Amortization of core deposit intangible: There was an increase in amortization of core deposit intangible of $630 thousand for the period ended September 30, 2026, as compared to the same period in 2025. The increase was driven by the NBC and Frontier mergers.

Other: Other non-interest expenses consists of subscriptions, memberships and dues, employee expenses, including travel, meals, entertainment and education, supplies, printing, insurance, account related losses, correspondent bank fees, customer program expenses, losses net of gains on the sale of fixed assets, losses net of gains on the sale of repossessed assets other than real estate, other operating expenses, such as settlement of claims, losses from limited partnerships entered into for tax credits and provision for unfunded commitments. The overall increase is comprised of a number of insignificant changes within expense categories noted above.

Nine months ended September 30, 2026, compared with nine months ended September 30, 2025: For the nine months ended September 30, 2026, non-interest expense totaled $150.0 million, an increase of $21.8 million, when compared to the nine months ended September 30, 2025. Changes in the various components of non-interest expense for the nine months ended September 30, 2026, and 2025, are discussed in more detail in the following table.

For the Nine Months Ended September 30,

Salaries and employee benefits: There was an increase in salaries and employee benefits of $12.4 million for the period ended September 30, 2026, as compared to the same period in 2025. The increase in employee salaries and wages was due to additional payroll costs as well as an increase in employee insurance expense, which is primarily driven by the increase in staff from the Frontier merger.

Net occupancy and equipment: There was an increase in net occupancy and equipment of $2.9 million for the period ended September 30, 2026, as compared to the same period in 2025. The increase was primarily related to Frontier lease amortization, rent and depreciation.

Amortization of core deposit intangible: There was an increase in amortization of core deposit intangible of $2.7 million for the period ended September 30, 2026, as compared to the same period in 2025. The increase was driven by the NBC and Frontier mergers.

Other: Other non-interest expenses consists of subscriptions, memberships and dues, employee expenses, including travel, meals, entertainment and education, supplies, printing, insurance, account related losses, correspondent bank fees, customer program expenses, losses net of gains on the sale of fixed assets, losses net of gains on the sale of repossessed assets other than real estate, other operating expenses, such as settlement of claims, losses from limited partnerships entered into for tax credits and provision for unfunded commitments. The overall increase is comprised primarily of provision expenses on funded commitments offset by a gain on the sale of fixed assets and a number of individually insignificant changes within expense categories noted above.

Efficiency Ratio

The efficiency ratio is a supplemental financial measure utilized in the internal evaluation of performance and is not defined under GAAP. For a reconciliation of non-GAAP financial measures see “Non-GAAP Financial Measures” in this Item 2. The calculation of our efficiency ratio is described under “Non-GAAP Financial Measures” in this Item 2. Generally, an increase in the efficiency ratio indicates that more resources are being utilized to generate the same volume of income, while a decrease would indicate a more efficient allocation of resources.

The efficiency ratio was 53.99% for the three months ended September 30, 2026, compared with 58.31% for the three months ended September 30, 2025. The positive trend was driven by realization of positive operating leverage through our mergers with NBC and Frontier as earnings grew at a faster pace than the expenses required to produce them.

Income Taxes

In general, we record income tax expense each quarter based on our estimate of the full year’s effective tax rate which includes, in addition to statutory rates, estimated amounts for tax-exempt interest income, non-taxable life insurance income, non-deductible executive compensation, valuation allowance on deferred assets, other non-deductible expense, and federal and state income tax credits anticipated to be available in proportion to anticipated annual income before income taxes. Certain items, however, are given discrete period treatment and the tax effects for such items are therefore reported in the quarter that an event arises. Events or items that may give rise to discrete recognition include excess tax benefits or shortfalls with respect to share-based compensation and changes in tax law.

During the tax year ended December 31, 2024, a Corporate Application for Tentative Refund was filed to carry back excess general business credits from 2023 to the 2020, 2021 and 2022 tax years resulting in a refund of $14.9 million which was received in the second quarter of 2025. Pursuant to Section 6405 of the Internal Revenue Code, refunds in excess of $5 million to a corporate taxpayer are subject to review by the Joint Committee on Taxation (JCT). On October 7, 2026, the IRS accepted the tax returns as adjusted for the tentative refund allowances and submitted its conclusions to the JCT for review. On October 26, 2026, the JCT completed its consideration of the IRS's report and concurred with the IRS's conclusions. While tax years ending December 31, 2020 and 2021, are closed for audit purposes, tax year ending December 31, 2022, remains open and, under request from the IRS, the statute of limitation has been extended to October 31, 2027.

On July 4, 2025, the United States enacted tax reform legislation through the One Big Beautiful Bill Act, which changes existing U.S. tax laws, including extending or making permanent certain provisions of the Tax Cuts and Jobs Act, repealing certain clean energy initiatives, in addition to other changes. While we are still evaluating the tax provisions effective in 2026, we do not expect them to have a material effect on our financial statements.

Three months ended September 30, 2026, compared with three months ended September 30, 2025: The effective income tax rate for the three-month period ended September 30, 2026 was 21.2%, compared with 20.5% for the three-month period ended September 30, 2025. In the prior quarter, we reported a pre-tax loss and income tax benefit associated with the loss on the sale of debt securities resulting in a positive effective tax rate (indicating tax benefit with pre-tax loss). In the current quarter, we reported pre-tax income and income tax expense resulting in a positive effective tax rate (indicating tax expense with pre-tax income). The comparison of the effective tax rate between the current and prior quarter is not meaningful due to the change from a pre-tax loss in the prior quarter to pre-tax income in the current quarter.

Nine months ended September 30, 2026, compared with nine months ended September 30, 2025: The effective income tax rate for the nine month period ended September 30, 2026, was 22.0% as compared to 873.5% for the nine month period ended September 30, 2025. See drivers of change in the section above.